CCL/PCB: undersupply in high-end segment to sustain along with technology migration

Research evidence excerpt

CCL/PCB: undersupply in high-end segment to sustain along with technology migration

ing unit

L-T opportunity for EMC from organic core solutions, as mass adoption of glass substrate

remains distant. We raise our 2026-28E EPS by 12-16% for EMC reflecting a stronger ASIC – application specific integrated

revenue/GM from 2Q26, and our PO goes to NT$7,800 (from NT$6,600) based on circuit

unchanged 34x 2H27-1H28E P/E. As for TUC, we make no changes to our estimates but

U/P – Underperformlift our PO to NT$2,600 (from NT$2,250), as we roll over our valuation base to 2H27-

1H28E (was 2Q27-1Q28E) given a lengthier under-supply in high-end CCL; our target PTFE – polytetrafluoroethylene

multiple is unchanged at 30.5x.

HLC – high layer count

Flag uncertainties on PTFE and CCL costs for PCB

L-T – long-termGiven the characteristics of materials, we still view it distant for pure PTFE-based

solutions (for PP/CCL) to be mass-adopted in AI server systems, and this makes us stay AI – artificial intelligence

relatively cautious on Shengyi’s growth outlook. Yet, we also expect it to benefit from

sustained undersupply in high-end CCL, which leads us to raise our PO to CNY83 (from PP – prepreg

CNY71) as we roll over our valuation to 2027E (from 2H26-1H27E) based on the same GM – gross margin

24x P/E. For Dynamic Holding, the ramp of AI projects is now expected to kick off

from 4Q26, which makes us flag potential headwinds to 3Q26 GM along with CCL price Dk – dielectric constant

hike. Yet, we believe the cost increase will be eventually passed through (to PCB price) in

Df – dissipation factor4Q26 at the earliest, while we also see positives from longer (over three months) order

visibility supported by demand from auto HDI and memory devices in the near-term.

Exhibit 1: Summary of PO changes